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STARBUCKS CORP (SBUX) Extended Graph Analysis

October 8th, 2019 Posted by Extended Analysis No Comment yet

SBUX

COMPANY PROFILE

Starbucks Corp began in 1971. The company started in one store in Seattle’s Pike Market Place as a roaster and retailer of whole bean and ground coffee, tea, and spices. The business expanded globally and has millions of daily customers with exceptional products and more than 30,000 retail stores in 80 markets as of June 30, 2019.

Quoted from the company’s website: “ Starbucks is named after the first mate in Herman Melville’s Moby Dick. Their logo is also inspired by the sea, featuring a twin-tailed siren from Greek mythology.

The company’s mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

The company believed in serving the best coffee possible and its their goal that all their coffee to be grown in the highest standard of quality, using ethical sourcing practices.

 

STARBUCKS STANDARD GRAPH ANALYSIS 

1. SBUX CASH FLOWS

CASH FLOWS

 

2014-09 2015-09 2016-09 2017-09 2018-09 TTM
Net cash provided by operating activities 507,800,000 3,749,100,000 4,575,100,000 4,174,300,000 11,937,800,000 12,372,200,000
Net cash used for investing activities -817,700,000 -1,520,300,000 -2,222,900,000 -850,000,000 -2,361,500,000 -1,171,300,000
Net cash provided by (used for) financing activities -623,300,000 -2,256,500,000 -1,750,000,000 -3,001,600,000 -3,242,800,000 -8,297,900,000
Capital expenditure -1,160,900,000 -1,303,700,000 -1,440,300,000 -1,519,400,000 -1,976,400,000 -1,849,300,000
Free cash flow -553,100,000 2,445,400,000 3,134,800,000 2,654,900,000 9,961,400,000 10,522,900,000


Facts:

  • Net cash provided by operating activities was $12,372,200,000 in the trailing twelve months.
  • Net cash used for investing activities was -$1,171,300,000 in the trailing twelve months.
  • Net cash provided by (used for) financing activities was -$8,297,900,000 in the trailing twelve months.
  • Capital expenditure was -$1,849,300,000 in the trailing twelve months.
  • Free cash flows was $10,522,900,000 in the trailing twelve months.

Explanation

  • The company has managed to produce sufficient net cash provided by operating activities in the last five years. Year-over-year cash from operation increases, shows that the management was efficient in running the business.
  • Net cash used for investing activities consist of investment in properties and purchases of investments.
  • In cash flows from financing activities there was a debt issued in significant amount, and the company had repurchase common stock at $11 billion.
  • Capital expenditure consist of investment in property, plant and equipment.
  • Free cash flow increased 330 percent from 2015 to the trailing twelve months.

Interpretation

The company was efficient in providing sufficient cash from the operation and the cash increases year-over-year in the last five years. Further, Starbucks has enough cash for investing in property, plant and equipment, acquisition and purchases. 

2. SBUX BALANCE SHEET

BALANCE SHEET (1)

2014-09 2015-09 2016-09 2017-09 2018-09 2019-09
Total Cash 1,843,800,000 1,611,400,000 2,263,200,000 2,690,900,000 8,937,800,000 8,937,800,000
Total current assets 4,168,700,000 4,352,700,000 4,760,500,000 5,283,400,000 12,494,200,000 12,494,200,000
Total assets 10,752,900,000 12,446,100,000 14,329,500,000 14,365,600,000 24,156,400,000 24,156,400,000
Total current liabilities 3,038,700,000 3,653,500,000 4,546,900,000 4,220,700,000 5,684,200,000 5,684,200,000
Total liabilities 5,480,900,000 6,628,100,000 8,445,500,000 8,915,500,000 22,986,900,000 22,986,900,000
Equity 5,272,000,000 5,818,000,000 5,884,000,000 5,450,100,000 1,169,500,000 1,169,500,000
Retained earnings 5,206,600,000 5,974,800,000 5,949,800,000 5,563,200,000 1,457,400,000 1,457,400,000
Total Debt 2,048,300,000 2,347,500,000 3,202,600,000 3,932,600,000 9,440,100,000 9,440,100,000
Working Capital 1,130,000,000 699,000,000 213,000,000 1,063,000,000 6,810,000,000 6,810,000,000

Facts: 

  • Total cash was $8.9 billion in 2018 and the trailing twelve months.
  • Total current assets was $12.49 billion in 2018 and the trailing twelve months.
  • Total assets was $24.16 billion in 2018 and the trailing twelve months.
  • Total current liabilities was $5.68 billion in 2018 and the trailing twelve months.
  • Total liabilities was $22.99 billion in 2018 and the trailing twelve months.
  • Equity was $1.17 billion in 2018 and the trailing twelve months.
  • Retained earnings was $1.46 billion in 2018 and the trailing twelve months.
  • Total debt was $9.44 billion in 2018 and the trailing twelve months.
  • Working capital was $6.8 billion in 2018 and the trailing twelve months.

Explanation

  • Total cash has a growth of 385 percent in five years
  • Total current assets has a growth of 200 percent in five years.
  • Total assets has a growth of 125 percent in five years.
  • Total current liabilities represent 25 percent of total liabilities.
  • Total liabilities represent 95 percent of total liabilities and stockholders equity. 
  • Equity has a negative growth of 78 percent in five years.
  • Retained earnings has a negative growth of 72 percent in 5 years.
  • Total debt had increased 361 percent in five years.
  • Working capital had increased 503 percent in five years and it represents 41 percent of total liabilities.

Interpretation

Starbucks has a strong balance sheet and is liquid. Its total cash alone is sufficient in paying its current liabilities. However, the balance sheet shows that Starbucks is highly leveraged at 95 percent. The company is using debt in financing its growth which is very dangerous and might lead to bankruptcy in the future.

3. SBUX FINANCIAL RATIOS

FINANCIAL RATIOS

2014 2015 2016 2017 2018 TTM
Asset Turnover (avg) 1.48 1.65 1.59 1.56 1.28 1.37
Return on Asset (ROA) 18.57 23.77 21.05 20.11 23.46 18.66
Return on Equity (ROE) 42.41 49.73 48.16 50.90 136.51 136.51
Financial Leverage (avg) 2.04 2.14 2.44 2.64 20.66 20.66
Return on Invested Capital % 30.79 35.86 31.02 29.92 44.26 44.26
Interest Coverage 50.29 56.36 52.64 47.68 34.94 15.69


Facts:

  • Asset Turnover was averaging 1.37 in the trailing twelve months.
  • Return on assets was 18.66 percent in the trailing twelve months.
  • Return on equity was 136.51 percent in the trailing twelve months.
  • Financial leverage was average 20.66 ratio in the trailing twelve months.
  • Return on invested capital was 44.26 percent in the trailing twelve months.
  • Interest coverage was 15.69 ratio in the trailing twelve months.

Explanation

  • Asset turnover ratio indicates that for every dollar in asset, it generated $1.37 in sales.
  • Return on assets tells us that every dollar that is invested in asset produced 19 cents of income.
  • Return on equity shows that for every dollar invested in equity, it produced $1.37 income. ROE jumps 136 percent from 2017 to 2018.
  • Financial leverage tells us that for every dollar in equity, the firm has $20.66 of total assets. The ratio soared up to 683 percent from 2017 to 2018.
  • The company is generating a 44 percent return on invested capital.
  • Interest coverage tells us that the company is making more than enough money to pay its interest obligation with extra earnings left to pay for the principal. 

Interpretation

The financial ratio of Starbucks were impressive, however, return on equity soared 136 percent due to decreased in equity by 79 percent during the same period. Another thing is, the financial leverage is too high which indicates that the operation of the business start to get risky. The company is operating its business in a borrowed funds, which means the creditors has more stakes than the investors. 

4. INCOME AND MARKET

SBUX INCOME AND MARKET

2014-09 2015-09 2016-09 2017-09 2018-09 TTM
Sales 16,447,800,000 19,162,700,000 21,315,900,000 22,386,800,000 24,719,500,000 26,065,200,000
EBIT 2,792,600,000 3,351,100,000 3,853,700,000 3,896,800,000 3,806,500,000 3,826,300,000
Net Income 2,068,100,000 2,757,400,000 2,817,700,000 2,884,700,000 4,518,300,000 3,551,900,000
Market Capitalization 61,570,000,000 89,181,000,000 80,899,000,000 81,094,000,000 80,069,000,000 105,839,000,000
Intrinsic Value 88,446,601,523 99,655,021,787 87,118,974,412 89,719,054,322 185,689,850,736 185,689,850,736


Facts:

  • Sales was $26 billion in the trailing twelve months.
  • EBIT was $3.8 billion in the trailing twelve months.
  • Net income was $3.55 billion in the trailing twelve months.
  • Market capitalization was $105.839 billion in the trailing twelve months.
  • Intrinsic value was $185.69 billion 2018.

Explanation

  • The sales increases year-over-year in the past five years and has a growth of 58 percent..
  • EBIT was stable and has a growth of 37 percent in five years.
  • Net income growth was 72 percent in five years.
  • Market capitalization  growth was 72 percent in five years.
  • Intrinsic value increased 110 percent from 2014 to 2018. 

Explanation

The earnings of the company is running smoothly from top to bottom in five years, the current true value soared impressively in the last five years.

 

5. KEY EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

2014 2015 2016 2017 2018
Key Executive Compensation 37,652,142 40,913,970 47,469,559 45,955,484 70,184,613
Kevin R. Johnson/President and Chief Executive Officer, Financial Officer 0 8,474,173 11,057,912 11,480,364 13,382,480
Scott H. Maw/Former Executive VP and CFO 2,215,390 3,654,372 4,385,431 5,761,602 5,980,769
Howard Schultz/Former Executive Chairman of the Board 21,466,454 20,091,353 21,815,498 17,980,890 30,181,610
Rosalind G. Brewere/Group President, Americas and COO 0 0 0 0 9,152,082
John Culver/Group President, International Channel Development and Global Coffee and Tea 6,332,919 3,836,988 5,244,124 5,366,864 5,907,186
Clifford Burrows/Group President, Siren Retail 7,637,379 4,857,084 4,966,594 5,365,764 5,580,486

Facts

  • The total key executive compensation in 2018 was $70.18 million.
  • Kevin R. Johnson, CEO and Financial Officer compensation was $13.38 million in 2018.
  • Scott H Maw, former EVP and CEO compensation in 2018 was $5.981 million.
  • Howard Schultz, former Executive Chairman of the Board compensation was $30.18 million in 2018.
  • Rosalind Brewer, Group President Americas and COO compensation was $9.15 million in 2018.
  • John Calver, Group President International Channel Development and Global Coffee and Tea compensation was $5.91 million in 2018.
  • Clifford Burrows, Group President Siren Retail compensation was $5.58 million in 2018.

Explanation

  • The key executive compensation is composed of the following breakdown:
    • Salary $4.873 million
    • Bonus                                     $0.334 million
    • Restricted Stock Award        $30.959 million
    • Securities option                  $28.364 million
    • Non-equity compensation    $ 5.031 million
    • Other compensation            $ 0.623 million
  • Kevin R. Johnson compensation represent 19 percent of the total key executive compensation in 2018.
  • Scott H Maw compensation represent 8.5 percent of the total key executive compensation in 2018.
  • Howard Schultz compensation represent 43 percent of the total key executive compensation.
  • Rosalind Brewer compensation represent 43 percent of the total key executive compensation in 2018.
  • John Calver compensation represent 8.42 percent of the total key executive compensation in 2018.
  • Clifford Burrows compensation represent 8 percent of the total key executive compensation.

Interpretation

The total key executive compensation represent 1.55 percent of the net income. Salary has only 7 percent of the total executive compensation, restricted stock award and securities options have a big chunk of the total compensation.

6. LOBBYING AND CONTRIBUTIONS

STARBUCKS LOBBYING AND CONTRIBUTIONS

2004 2005 2006 2007 2008 2009 2010 2011
120,000 200,000 280,000 390,000 638,000 530,000 730,000 580,000

 

2012 2013 2014 2015 2016 2017 2018 2019
490,000 2,190,000 460,000 780,000 810,000 990,000 1,060,000 510,000

Facts:

  • Lobbying in 2004 amounted to $120k.
  • Lobbying in 2005 amounted to $200k.
  • 2006 lobbying amounted to $280k.
  • 2007 lobbying amounted to $390k.
  • 2008 lobbying amounted to $638k.
  • 2009 lobbying amounted to $530k.
  • 2010 lobbying amounted to $730k.
  • 2011 lobbying amounted to $580k.
  • 2012 lobbying amounted to $490k.
  • 2013 lobbying amounted to $2,190M.
  • 2014 lobbying amounted to $460k
  • 2015 lobbying amounted to $780k.
  • 2016 lobbying amounted to $810k.
  • 2017 lobbying amounted to $990k.
  • 2018 lobbying amounted to $1,060M.
  • 2019 lobbying amounted to $510k.

Explanation

Starbucks is incurring a yearly lobbying and contributions since 1998. The lobbying expenses come from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.

7. FINANCIAL STRENGTH

FINANCIAL STRENGTH

DATA:

Working Capital $6,810,000,000
Total Assets $24,156,400,000
Sales $26,065,200,000
EBIT $2,826,300,000
Market value of equity $105,839,000,000
Book value of total liabilities $22,986,900,000
Retained Earnings $1,457,400,000


CALCULATION

RATIO SCORE Z-SCORE
A Working Capital/Total Assets  0.28 1.2 0.336
B Retained Earnings/Total Assets 0.06 1.4 0.084
C EBIT/Total Assets 0.12 3.3 0.396
D Market value of equity/Book value of total assets 4.6 0.60 2.76
E Sales/Total Assets 1.08 1.00 1.08
Z-Score 4.656

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The overall score was 4.656, the grading scale for the score 3 and above indicates the company will not declare bankruptcy, in other words, Starbucks is not close to bankruptcy and the business is doing well with its operation.

Conclusion

The company has a strong balance sheet and is liquid. Profitability shows that the company produces earnings sufficient for the operation. Starbucks is good in handling and in using the borrowed funds in the operation of the business. However, the stock of Starbucks Corp is not recommended for a Buy due to its high level of total liabilities than the investors equity which can be a very risky operation.

Citation

https://www.sec.gov/cgi-bin/browse-edgar?CIK=SBUX&owner=exclude&action=getcompany&Find=Search

https://www.opensecrets.org/orgs/lobby.php?id=D000037780

Researched and written by Criselda

Twitter: criseldarome 

 

Chipotle Mexican Grill Inc Class A (CMG) Graph Analysis

May 16th, 2017 Posted by Graph Analysis No Comment yet

About the Company

CMG logo

Chipotle Mexican Grill A (CMG) is a Delaware corporation which operates 2,198 Chipotle Mexican Grill restaurants all over the United States and 29 international Chipotle restaurants. Moreover, they operate 23 restaurants in non-Chipotle concepts. The company is a public    company listed on New York Stock Exchange (NYSE) with the symbol CMG. Its initial public offering was on January 26, 2006. Chipotle Mexican Grill A was founded on July 13, 1993, 23 years ago by Steve Ells. Headquartered in Denver, Colorado, United States. The company has more than 45, 200 employees.

CMG GRAPH ANALYSIS

A. CMG CASH FLOWS

CMG CF

B. CMG BALANCE SHEET

CMG BS

C. CMG FINANCIAL RATIOS

CMG FINANCIAL RATIOS

D. CMG INCOME AND MARKET

CMG INC MRKT

E. CMG KEY EXECUTIVE COMPENSATION

CMG COMPENSATION

F. CMG FINANCIAL STRENGTH

CMG STRENGTH
Thank you for reading.

Researched and created by Criselda

McDonalds mcd

McDonalds (MCD)Business Is Really Real Estate And Franchise

June 5th, 2016 Posted by Company Research Report No Comment yet

McDonalds company research.

MCD

McDonalds Company Research

Company’s History and Nature of Business

The business began in 1940; a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California. The opening of a franchised was first acquired by Czech-American businessman Ray Kroc in Des Plaines, Illinois on 1955 which led its worldwide expansion and became listed on the public stock markets in 1965. Today, McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants which serves around 68 million customers daily in 119 countries globally.

The company was managing with its segment which includes the United States, Europe, Asia, the Middle East, and Africa. McDonalds’s offer variations to suit each consumer’s preferences and taste, its menu includes, hamburgers, cheeseburgers, several chicken sandwiches beverages, and many others. They have the passion for quality, that every single ingredient was tested and perfected to fit the operating system. As the company expands into international markets it becomes a symbol of globalization, its prominence has sometimes made as a topic of public debates about obesity, corporate ethics, and consumer responsibility.

How do they make money?

Mc Donald’s generates its income as an investor in properties, a franchiser of restaurants and an operator of restaurants. Around 154% of the restaurants are owned and operated by McDonald’s Corporation directly. Moreover, the business operates through a variety of franchise agreements and joint ventures, wherein they collect franchise fees and marketing fees and also collect rent which calculated on the basis of sales. The company’s policy includes organizing the supply of food and materials to the restaurant through approved third party logistics operators and strictly would not allow direct sales of food or materials to franchisees.

Moreover, the company retains all of the profit earned by company-owned restaurants, they also incur a cost that is largely fixed they ensure the profit of each restaurant is either maintained or increased. The owner of each franchised restaurant keeps all the profit they make through sales after paying McDonald’s a royalty for trading under the brand name and rent for operating in a company’s owned property. The main advantage of operating franchised restaurants is that it guarantees a stream of income as the company sees to it to reduce the level of risk while enabling.

Who is running the business and what is their background?

Corporate Governance is one of the main reason that these terms (CEO, CFO) exist. Corporate titles on company officials are means to identify its function and responsibility in the organization. Here are McDonald’s company official’s brief biographies.

CEO

Thompson, Donald

Mr. Donald has been President, Chief Executive Officer since July 2012, and was also elected as Director on 2011. Prior to that, he serves as President, McDonald’s USA from August 2006 to January 2010, Mr. Thompson has been with the Company for 22 years. Mr. Thompson provides a Company perspective in Board discussions about the business, particularly with respect to worldwide operations, competitive landscape, senior leadership and strategic opportunities and challenges for the Company. In addition, as an independent director of another public company, Mr. Thompson has gained additional perspectives, including on governance and operational matters relevant to the Company.

During his 23 years at McDonald’s, Thompson has helped drive business results and global strategic innovation across the organization. Since joining as an electrical engineer in 1990, he has held a variety of key leadership positions within the company including Regional Vice President, Division President, and Chief Operating Officer. Between 2006 and 2010, Thompson served as President of McDonald’s USA, the company’s largest business segment. Most recently as President and COO of McDonald’s Corporation, Thompson and his leadership team established three global growth priorities in support of the McDonald’s Plan to win: to optimize the menu, modernize the customer experience and broaden restaurant accessibility.

CFO   

Peter J. Bensen

Mr. Peter J. Bensen is Chief Financial Officer, Senior Executive Vice President of the company a position he has held since January 2008. He is responsible for all financials matter of the company including Accounting, Internal Audit, and Controls, Tax, Treasury and Investor Relation as well as IT, Shared Service, Facilities, and Aviation. Moreover, Mr. Bensen has joined McDonald’s in 1996 as Director of Financial Accounting & reporting and subsequently held positions of increasing responsibility. Prior to joining the company, He was a senior manager for Ernst & Young in Chicago, where he serves multi-national audit, clients. Mr. Bensen is a graduate of St. Joseph’s College in Rensselaer, Indiana.

Do you trust these people and are they confident?

Basing from their company’s profile, I do trust these people and I believe they are confident as they played some major roles. Each of their experiences is the best factors that they could contribute in order to the company’s progress.

McDonalds Value Investing

Financial Analysis

The above data shows that McDonald’s corporation has an average degree of liquidity; current ratios which have an average of 1.44 and the quick ratio was averaging to 1.18. It tells us that the company is capable of meeting its short-term obligations when the due date comes. Moreover, the solvency ratio has an average of 0.50, and the leverage ratio has an average of 0.85 percent, an indication that the company is solvent.

McDonald’s gross margin was averaging 38 percent and has a stable movement. Net margin was averaging 18.62 percent however, it is trending down year over year.

McDonalds Investment Valuation

The Investment Valuation has always been a topic in financial and business circles, the method used is the basic mathematical technique that calculates the value of an investment as the present value of all future cash flows expected to be generated by the investment.

McDonald’s has a sustainable growth rate of 17 percent, average, and the calculated margin of safety was 62 percent. Moreover, the market capitalization was $94.84 billion at a share price of $93.53 as of Aug.12, 2014.

The above table shows that the company has:

  • an average return on equity of 32.38,
  • book value per share was averaging of 14.45,
  • the price to earnings ratio has an average of 18.20, this is the price that the investors are willing to pay for the stock of the company.
  • Earnings per share were averaging $ 5.12 this is the company’s net earnings allocated to each share of common stocks.

CITATION

http://www.sec.gov/Archives/edgar/data/63908/000119312514140308/d666434ddef14a.htm http://www.reuters.com/finance/stocks/officerProfile?symbol=MCD&officerId=845631 http://news.mcdonalds.com/US/Executive-Team http://www.aboutmcdonalds.com/mcd/our_company/leadership/peter_j_bensen.html

Research and Written by Meriam

Edited by Cris

Note:

Research Reports can be found under the company tab.